Forex glossary
Stop out
Scope: EU model / Poland
Documentation context: The half-initial-margin trigger belongs to the cited retail-CFD model; ESMA Decision 2018/1636 is historical, while the KNF decision describes the Polish conditions.
Stop-out is forced closure of one or more positions under the applicable collateral-shortfall rules. The EU retail-CFD model and Poland's KNF decision use an account-based trigger below half of total initial margin, counting funds and open P/L. Those rules do not prescribe a universal largest-loss-first liquidation order.
Illustrative example
How does it work in practice?
In a hypothetical CFD model, total initial margin is 1,000 USD and funds including open P/L fall to 490 USD. That is 49%, below the assumed 50% threshold; the provider closes at least one position.
Warning, stop-out and stop loss
Illustrative model only: initial and used margin both remain 1,000 USD; warning below 120%, close-out below 50%.
On a narrow screen, the table can be scrolled horizontally.
| Term | What it describes | Shared example |
|---|---|---|
| Margin call | An account-margin state or warning defined by its collateral rules. | Equity of 1,100 USD gives 110%: below the model warning threshold. |
| Stop out | Closure of one or more positions following a collateral shortfall. | Equity of 490 USD gives 49%: below the assumed close-out threshold. |
| Stop loss | A price condition for a particular position, separate from these thresholds. | Long entry at 10 USD per unit, stop at 9 USD; an ordinary stop does not guarantee a 9 USD fill. |
Takeaway: The three concepts have different triggers. These example thresholds are not a provider offer, and a warning guarantees no reaction window.
Change an assumption, see the result
What changes if…?
Select a model threshold and observe the reading below it. Keep margin fixed for the exercise; actual closure can change required collateral and valuation.
Model: equity = balance + open P/L; free margin = equity − margin. No credit, fees or other blocks. The stop-out threshold is hypothetical; the actual formula and action depend on the provider’s terms.
Check your understanding
Check the threshold basis and close-out condition without inventing liquidation order.
Show the answer and explanation
The condition to close one or more positions is met.
490 USD is below the model’s 500 USD threshold. This calculation specifies neither liquidation order nor actual exit prices.
Read the account and its margin thresholds
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Related terms
Sources and documentation
- ESMA Decision (EU) 2018/1636: temporary retail CFD restrictions
The historical ESMA decision renewed a temporary retail-CFD restriction model that included account-based margin close-out protection.
- KNF Decision No. DAS.456.2.2019 of 1 August 2019
The Polish decision defines initial-margin and account-based close-out requirements for retail CFDs, with separate conditions for experienced retail clients.
Document read:
The example illustrates the mechanism. Check current account conditions and instrument specifications with the provider.